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As a metals broker I am always asked about storage.
I have rather strong feelings about this topic and I always advise people the
following:
1. Always store outside of
the financial system. This means no ETF’s (Even though they are easy
you should exercise caution & read the prospectus and zoom in on the
custody section – if you can stay awake long enough to read it). Also
this means no bank safe deposit box storage. Safe deposit boxes are the worst
of both worlds. They ARE NOT insured by the bank but yet they are subject to
banking regulations. It also means no commodities contracts held by financial
firms like MF Global. (Jon Corzine seemed like such a nice fellow before he
got into trouble betting house money and hypothecated private accounts to
cover his losses.)
2. Take possession if at all
possible. Sure it can be stolen, so just like anything else you must take
precautions. You are an adult after
all.
3. If for some reason you
feel uncomfortable storing yourself or storing all of your metals yourself
then look for a non-bank storage facility. Preferably a storage facility or
vaulting service that is insured against loss. This will cost a bit more than
a private deposit box facility but you will be insured against theft. Also
make sure that your metal is in “segregated” storage as opposed
to “pooled” storage. You want to make sure that your exact metal
will be returned to you whenever you are ready. Visit the depository and see
exactly what is involved to deposit metals and more importantly; what is
involved to withdraw those same metals.
Let’s talk about taking possession first. Just
how much room will you need?
A box of 500- 1 oz silver
eagles is about the size of a big shoe box or about 9” x 15”
– 6” tall. A box is worth about $17,000 more or less. So if you
want to store $100,000 in silver you will need a space about the size of 6
large shoeboxes. Large 100 oz silver bars are a bit
more compact and stack much easier in a smaller space. 90% silver is a bit
more bulky and doesn’t stack well at all in bulk bags. Gold on the
other hand is much more portable. Just 60-1 oz gold
coins are a bit over $100,000 USD and do not take up much room at all. They
could easily fit inside the cardboard tube of a roll of paper towels.
That same $100,000 of silver (or 6 – 500 coin
boxes of silver eagles) will weigh about 206 pounds. The same $100,000 of
gold (60-1 oz coins) will weigh a little over 4
pounds. A million dollars in gold would only weigh 40 pounds or so and could
be easily carried off by one person without much effort. A million dollars in
silver would weigh 2,060 and would require quite a bit of effort and a truck
to carry it all away.
So where to put all this? For centuries people have
worried about how to store their wealth. Ask someone who lived through the
great depression about hiding wealth. If you can find someone in their
nineties that can remember they will tell you that most people didn’t
trust banks and hid their money around the house. The last 3 or so
generations have always trusted the banking system and have never given much
thought to holding their wealth. Over the course of history it is more common
than you may think to store your own wealth.
Just visit any old European city, affluent sections
of central or south America or even the French Quarter in New Orleans or old
Charleston and you will start to notice something about the architecture.
Most of the homes are built like a fortress. They have very nice interior
courtyards but also have walled fronts with heavy doors and heavy shutters on
the street windows. In some locations it was common to set beer bottles in
mortar along the top of the masonry outer wall and then break off the tops
(sort of a cheap home-made razor wire). During normal times the heavy main
door to the courtyard and heavy window shutters were open and things looked
fairly normal but at night or in times of trouble these places could lock up
fairly secure. The modern suburban home is much harder to defend and usually
depends on a security system to notify the local police. While the modern
home in the US is not as secure as some there is certainly no reason you
cannot keep some of your wealth at home if you so chose.
The first layer of security is secrecy. If no one
knows there are valuables in your home then there is no reason for someone to
come and search for them. Everyone has seen the pirate movie where after the
loot is buried the head pirate kills everyone and then buries all of them
along with the treasure. I would not recommend this technique but the secrecy
involved has merit. You can hide small amounts of gold most anywhere such as:
within steel fence posts, buried in the garden or in the yard, in hollowed
out books, inside frozen food in the freezer, within the wall space behind
dummy electrical receptacles. The list is endless and can be as varied as
your imagination. If you do hide your metals you should probably tell someone
in case something happens to you just make sure it is someone you trust.
Another consideration is what pick-pockets call a “tell”. If you
hide money on your person in a secret place most people routinely give themselves away by constantly checking to make sure it is
still there. The first thief simply bumps into someone innocently and the
victim immediately touches his secret hiding place to make sure the valuables
are still safe. The second theif knows exactly
where to lift the valuables a bit later. If you bury or hide your metals
don’t go check on them routinely or you will simply give away your
hiding place! Sounds very simple in theory but most people just can’t
stay away.
The next layer of security is a safe itself. If the
safe can be hidden then all the better. If the safe
can be locked behind a closet door or a false wall then it will have to be
found before it can be attacked. If you are interested in purchasing a safe
be certain to read my article on “A Guide to Buying a Safe”. It
will tell you more than you ever wanted to know about safes and safe ratings.
Finally if you are interested in private storage
there are several options. There are private non-bank companies that rent
private safe deposit boxes in the US as well as several others around the
world. Give us a call if you are interested and I will tell you about all
that we have visited.
Finally there are private depositories that store
your metals in a segregated and insured manner. These are more expensive but
your metals are insured. Just contact us and we will be happy to tell you about
all these depositories that we are familiar with as well.
Buying precious metals is just the first step.
Deciding where to keep them is quite another decision. However, don’t
let the issue of storage scare you away. Doing nothing and keep depreciating
currency in a bank that pays little of no interest means you are already
having your wealth stolen a little at a time day after day.
Larry LaBorde,
Larry sells precious metals at the Silver Trading
Company, LLC. Visit us at www.silvertrading.net . Worried
about storage issues? Ask us and maybe we can help.
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